Best Multifamily Real Estate Investing Blog

What Are The Four Energy Blocks And How Are They Holding You Back

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The goal of an IPEC (Institute of Professional Excellence) coach is to have a complete understanding of what a client wants, what is blocking them and why. This article is going to focus on what those blocks are and how to break through these barriers.

A block is simply anything that hinders you, and it comes from the external (economy) or internal. An internal block could be your beliefs and your attitudes about the world. Ironically, 95% of our blocks are internal. Have you ever heard the saying “Your external appearances are a manifestation of what’s going on inside”? Simply put, what’s going on inside will reflect your results.

Let me give you a simple example. Have you ever noticed someone who is always late for his appointments and is living in constant chaos? This is just a reflection of what he is processing internally. On the other hand, a person who never has an excuse, is always present and attacks any challenge is one who has very few internal blocks.

Let me list the four blocks and discuss how to conquer these blocks:

Limiting Beliefs
Interpretations
Assumptions
Gremlin

A coach uses the acronym GAIL to refer to the blocks. Gremlins are the most powerful blocks, and limiting beliefs are the least restrictive. The goal is to understand each of these blocks, remove these blocks and create a new reality. Let’ begin with limiting beliefs:

Limiting belief:

This block is responsible for holding someone back from achieving success. It is something that you accept in life that limits you. If you believe that you will not be able to accomplish a goal, then you are more than likely not to put forth the effort to achieve the goal. I compare this to a self-fulfilling prophecy. If you convince yourself you can’t, then you won’t. Most of us accept limiting beliefs as true because we have “learned” it from someone else. Turn on the TV and all you hear is “That’s not possible!”

Listen to the Audio version of this blog (narrated by Gino Barbaro):

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The ability to run a four-minute mile is the classic example of a limiting belief. At the time, everyone thought it was impossible to run a mile in under four minutes. Along comes Roger Bannister, and his time of 3.59 minutes shattered that limiting belief. Around two months later, another runner eclipsed the four-minute mark. The floodgates were now open all because Roger shattered the prevailing limiting belief of the day.

So how do we remove limiting beliefs from our lives? One way is to become Roger Bannister and disprove the limiting belief. Another way is to ask questions, such as “Where did you get that idea from” or “How true is that belief”? A coach is there to identify your limiting beliefs and work to remove them.

Interpretations:

An interpretation is an opinion that you create about an event, situation or experience in your life. For instance, if you send your friend an email and you get no response, you may interpret it as your friend has no desire to talk to you. In reality, your friend may not have received the email or is too busy to respond at the moment. If you can find other ways to interpret a situation, it will begin to decrease the negative effects of the interpretation. Instead of blowing off your friend, you decide to pick up the phone to see if everything is okay.

I always like to ask the question “What’s another way to look at that?” This allows the individual to focus on other possibilities. The ability to pay close attention to your interpretation will make you realize how you react to certain interpretations.

Assumption:

To assume is to believe that if something happened in the past, it will occur again. This energy block can render an individual powerless because they will conclude it will always be the case. I credit the assumption as one of the main culprits to real estate investors who give up too soon. Their first investment has lost them money, and they conclude that will become the norm going forward. A person who realizes that this thinking is faulty will employ a different tactic and continue investing. This persistent action separates success from failure, and the assumption leads us to failure.

Discover how apartments are the best investment vehicle to create wealth and generate passive income:

How do you combat the assumption? You have to challenge an assumption because they are much stronger than limiting beliefs. They are usually based in personal experience, whereas limiting beliefs are either learned or told to you. Ask the question “Just because that happened in the past, why does it have to happen again”?

Gremlin:

I call this the grand-daddy of energy blocks. The gremlin is your inner critic, the voice you hear in your head that you are not good enough, not smart enough, too ugly. You get the picture. The gremlin receives its power from fear, and can immobilize us. The first step is to acknowledge your fears, then take control of them instead of allowing them to take control of you.

We all have our own personal gremlins. At IPEC, we are taught to give our gremlin a name, bring the gremlin out into the open to lessen its power and discuss why the gremlin has such control over our lives.

When I was working at my restaurant in the kitchen, my gremlin of not being smart enough would pop up from time to time. I thought being in the kitchen and not working in corporate America made me a lesser person. When I realized this energy block, I went to work on banishing this block and taking action towards creating another business. If I allowed the gremlin to paralyze me, the chances of taking positive action would be very low. I would probably still be stuck in the kitchen. I used my gremlin to motivate me into action.

Task:

Learn all four energy blocks. Find out which energy blocks you exhibit throughout the day. Begin to make a list of all of these blocks. The next step would be to contact a life coach and work together to eliminate these debilitating energy blocks. Once you do this, passion and excitement will flow back into your life.

Also listen to our podcast about the ‘Seven Levels of Energy’:

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How to Generate $10,000 in Passive Income Every Month through Multifamily Real Estate

By Gino Barbaro

When we talk about financial freedom, people seem to think of $10,000 as the magic number. This seems to be the number that people need to cover their monthly expenses and reach financial freedom.

So the question is, how do we get to $10,000 per month in income?

Let’s say you have a 25 unit apartment complex where each unit is generating for example $100 per month in profit.

25 unit apartment complex: $100 profit per unit X 25 units = $2500 per month in income

If you purchase four 25 unit deals, that will give you 100 units at $100 in profit each per month,

100 units: $100 profit per unit X 100 units = $10,000 per month in income

Some of you might say, I don’t have the down-payment for a 25 unit apartment complex. If you can’t do this by yourself and you need a partner, maybe you need 200 units to reach that magic number of $10,000 per month. Jake, My Brother & I partnered on our first 25 unit apartment complex and now we have closed on over 1,600 units (the first 1,000 units without syndication).

Watch out the video on IGTV:

https://www.instagram.com/tv/B92G938nz2J/

The $10,000 of profits each month does not include the ancillary benefits of real estate investing: with tax benefits and cost segregation, principal pay down and building a business.

If these numbers seem daunting to you start smaller & work your way up. Students in the Jake & Gino community are closing smaller assets like duplexes & quadplexes and we have some students that have partnered up and are closing on 40+ unit and 100+ unit deals.

And you might be wondering why multifamily? The reasons are compelling and simple:

Cash flow. If it don’t cash flow, let the grass grow.
Capital appreciation. The property will appreciate in value over time, and the tenants will be paying down the mortgage.
Tax Benefits.
Cycle resiliency. Multifamily is one of the three basic human needs. Food, clothing and apartments!

There are so many creative ways to do this, subscribe to our podcast, you’ll get a lot of information on how to start scaling up your business and taking control of your financial future.

For more information on how to generate passive income, check out some additional blogs on, How to Buy Your First Apartment Complex and Why Multifamily vs. Single Family.

When you’re ready to take that next step, click here to start the conversation.

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Flip The Script

In my experience, it is difficult for a sequel to deliver more value or have more of an impact than the original. You usually get some of the same concepts revisited from the first one, and a few new ideas to satisfy the consumer. Not so with Oren Klaff’s new book Flip The Script.

Checkout the Podcast with Oren Klaff:

Oren’s first book Pitch Anything created a framework to help investors understand how to raise capital, and then gave them the tools to create their own pitch. Flip The Script expands on his first book and introduces new concepts to teach the reader how not to sell your product, but to have the buyer desire your product.

In this article, I am going to dive into Oren’s new methods for closing deals and in his own words “plant your idea in the mind of another so they will discover it, appreciate it, and fall in love with it on their own.” We were fortunate to have Oren on our podcast to describe these methods. Listen to our podcast episode with Oren Klaff.

Oren Klaff Podcast Flip The Script

You can also click here to read our book review on Pitch Anything:

One of Oren’s gifts as a writer is to take a complex topic, such as Inception or brain formation, and describe the topics in an elementary fashion so that the reader can not only comprehend the topic, but apply the knowledge and grow their business. How does he accomplish this? Through years and years of doing deals, and injecting story after colorful story to keep the reader engaged.

Oren begins the book by introducing and defining the term Inception, which is implanting an idea in someone’s mind so that they think it’s their own. His main thesis through the book is that today’s products are bought, not sold. The traditional sales methods just do not work any longer in today’s market because the consumer is armed with information about your product and can spend a few minutes online comparing you to the market. Think of Tom Sawyer negotiating with his friends and getting them to see how much fun it would be to paint the fence. Inception!!

This is what was so compelling to me about Oren’s message, to have the customer decide for themselves that your product would be a good fit without having to brow beat them for the sale. Oren introduces tools in his book for you to create Inception:

Status alignment
The Flash Roll
Pre wired ideas
Plain vanilla
Buyer’s formula

I would like to dive into the first two, and show you how powerful Oren’s concepts are to you refining your pitch. In the status alignment, the goal is to align your status with whomever you are trying to pitch. If your customer senses that you are inferior, your pitch will fall upon deaf ears.

Listen to the audio summary of this Review:

I can give you an example of Status Alignment with an entrepreneur trying to grow his or her company. If the entrepreneur is not perceived to be the leader, and is too easily accessible, his status will be diminished. Status alignment is achieved when you are in front of a decision maker and one who understands your situation and can resolve it. Oren has a couple of excellent stories that illustrates status alignment.

The flash roll is one of my favorite ways to establish authority by delivering a concise script to your listener that highlights your expertise on your topic. Oren does a fantastic job on how you can create your own personal flash roll. The Jake & Gino flash roll would sound something like this:

“We run a vertically integrated real estate company that work in a symbiotic relationship that maximizes value for our entire customer base, from the residents we serve in property management, to the J&G students who are crushing it and have closed over a half a billion dollars in real estate, and to our investors, who are equity partners in our deals. The multifaceted multifamily approach of creating multiple streams of revenue through the various entities has been a game changer for our community.”

The methods that Oren has presented throughout his book work wonders on my kids as well. Pitching them an idea like cleaning their room, and then getting zero pushback AND having them think it was their idea should make any parent run to the store and buy multiple copies and share with friends.

Let me make it easy for you. All you need to do is click the link and you’ll be on your way to Inception:

Flip The Script

Please share with me any of these methods that you used on your kids with success.

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Influence: Science & Practice

Why does it seem as if some people have a greater level of influence over others? You’ve met those moms and dads out there who utter a few words to their children, and the children’s response is immediate obedience. Or the CEO of a company who has an amazing vision and can inspire and motivate his team to strive towards that vision. I think they all read the book Influence, by Robert Cialdini!

Mr. Cialdini is a world-renowned expert on the science of influence and has written multiple best-selling books on persuasion and influence. He is a gifted writer that presents difficult topics to his readers in such a way that they are enjoyable, yet the reader is left with actionable content that can be utilized immediately with amazing results. In this article, I would like to share with you Mr. Cialdini’s six weapons of influence and how we can utilize them ethically to have people comply with our requests.

The six weapons of influence are as follows:

Reciprocity
Consistency & Commitment
Social Proof
Liking
Authority
Scarcity

I would like to expand upon reciprocity & scarcity, and how to utilize them in business and multifamily real estate, through the help of Mr. Cialdini’s writing.

Listen to the Audio version of the Book Review:

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Reciprocity, as Mr. Cialdini states, is one of the most widespread norms of human behavior. All human societies follow this law, and we are more likely to comply with a request once someone has done a favor for us. The example that he uses in the book is the religious group the Hare Krishna and their ability to solicit donations from strangers.

The group began to give little gifts to strangers without anything in return, and once this power of reciprocity was formed, only then would the member ask for a donation. The power of reciprocity was such that it could overcome a dislike for the individual. You feel compelled to return the favor, and the law can trigger unequal exchanges. A $1 flower can net you a $5 donation. Sneaky, sneaky! Next time you’re walking through Costco or Wholefoods and decide to munch on all of the samples, think again. You may find yourself walking back and buying a pound of cheese.

Scarcity is another powerful weapon of influence, where opportunities seem more valuable to us when they become less available. A deadline or a limited number of items are two tactics that marketers employ to have the public comply with their offers. If we take something away or we create competition, it becomes more valuable. An example in multifamily is to show an apartment to multiple prospective tenants. The tenants sense the apparent interest and competition in the apartment, and are more likely to act and act quickly to sign the lease.

Utilizing these weapons of influence in an ethical manner is an important distinction that needs to be made. If you are going to offer a gift to someone, you should not expect anything in return. And if you are telling your customers that there is only two items left of a product, yet you have a warehouse full, you should stop and re-evaluate your tactics. These weapons are powerful and should only be used ethically for people to comply with your requests.

I highly recommend any salesperson, business owner, parent or anyone who wants to learn why they comply with other people’s demands to read Influence cover to cover. As an educator, I am always looking for ways for people to take the next step in their journey, and utilizing the weapons of influence that Mr. Cialdini teaches has created outstanding results for the Jake & Gino community.

Once you are done with Influence, then it’s onto Pre-Suasion!

Find more valuable resources like this one in the library of Jake and Gino real estate book reviews.

Please let me know what weapons of influence you are employing in your business by leaving us a comment below.

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3 Pillars To Managing The Corona Crisis

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With the COVID-19 pandemic impacting every facet of our livelihood, here we felt it was important to take a step back and document the things we have done that have had a positive impact on our business. While it is easy to lose sight of the fundamentals of running a business, below are the three main principles that we have been focusing on as a company now more than ever.

Communicate
Document
Make It Happen

Communicate: With everything changing constantly, we have created a Corona Task Force to have a meeting of the minds with our leadership, maintenance teams, and area property managers. This allows for new information to be quickly communicated transmitted to team members, updates regarding the morale of the team, and most importantly how the how are our residents are being impacted. For example, once the State of Kentucky halted evictions until July 2020, we provided updates every other day to highlight the news that residents could trust. We sent emails, posted letters, sent text messages, and posted announcements throughout our communities to make everyone of the updates

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Along with the Corona Task Force meetings we have added an End of Day Huddle with our management team. This meeting allows our team to spread good news in order to bolster a positive morale and gives each person the opportunity to share any new “need to know” information as things are changing daily. It can be a highlight from a resident, praising a particular team member for living the core values, or just our founders celebrating that we are working diligently during these trying times. These meetings are a constant reminder of why we do what we do every day, to make an impact.

Document: After we have communicated with our Corona Task Force team, we document the actions required. This is important because as we communicate this down to our property managers, maintenance teams, and residents, we need to have a consistent message across all the communities. For example, we have created a decision tree on whether or not employees should come to work if they have symptoms or have been exposed. Once the decision tree was formed, we created a flowchart to show the rest of our team members. This allows for our team members to be more confident that we have their safety in mind.

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When it comes to our residents, we are constantly researching assistance opportunities to help them during this time. Whether it be from Temporary Assistance for Needy Families (TANF), the Corona Stimulus checks, or 211.org for all of their needs. In these times, we know that the quality of customer service we provide to our residents now, will be how they remember us after this crisis has passed. We are committed to fulfilling our promise of providing customer service during a situation like this when they need it the most.

Make It Happen: We as real estate investors have to step up and help everyone during this time. We have to be rocks for our team members to show that we are a stable and essential employer. We need to be rocks for our residents to help them navigate these uncertain times by providing them with a stable community that will thrive and band together. During times like this we have to come up with creative ways to improve and maintain our communities. One example of how we are doing this is providing rolls of toilet paper to each resident with a card simply stating that during these “crappy” times, we are here for our you. Our team members have had to do things that nobody could prepare for. However, we are grateful for their efforts and remind them every day how good of a job they are doing.

Timely, honest, and transparent communication will always be a winning strategy. Whether it is to your team, residents, or investors, they will understand and respect you as an operator for it. Even though it is constantly changing they will appreciate the work it took to not only understand the updates, but the work it took to deliver the news.

This crisis has been an amazing learning opportunity and I am grateful to have an amazing network of people around me to help learn and grow from. Real estate is a team sport no matter what realm, asset class, or where you are. Thank you to all who have helped me. Thank you to the people on the front-lines of battling this virus. Hope everyone stays safe and healthy.

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Is This The Right Time To Get Into Multifamily?

By Gino Barbaro

The number one question that I get from either Jake and Gino students or potential students, or anyone learning or wanting to get into the multifamily space, Is this the right time to get into multifamily?

Now I need to ask you a question. Is it right for you? Is now the right time ready for you?

I knew when I got in back in 2013, I was ready. Was that the right time back then? We look back and we go, “Wow, all the deals are great. I loved it back then.” You could have found higher cap rates, better cash on cash returns and that’s true, but the economy was terrible. GDP was 1.5%, rents back then were really in the toilet. We were charging $350 for one-bedroom apartments. Those same apartments today have risen to over $600. There was no consumer sentiment. The economy was terrible and there was not that much money in the market in the economy for you to raise to do syndications back then.

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So although the timing was great, if you’re a contrarian, the vast majority of people are sitting on the sidelines because there was a lot of risk. There’s a lot of uncertainty. Now, over the past four or five years, what has been transpiring? The market has elevated, a ton more people have gotten into multifamily, money and investors are flooding to the market, and that has compressed cap rates and elevated pricing. Is it a good time now?

And like I already mentioned, it depends. Are you ready? Multifamily is a long-term play. It’s not as if you buy a deal today, and you walk away rich tomorrow. This is not a get rich quick scheme. It took Jake and I 18 months to find our first deal. That’s why if you’re ready for Multifamily, you need to start today because what do you need to do? You need to start with relationships. You need to start raising capital, talking to investors, educating yourself. Our mantra is Education*Action= Results. It’s going to take you a few months to select a market, meet brokers, learn how to properly underwrite a deal, and begin to go on property tours.

It takes years to hone-in on this skill. So if you want to start investing today, commit to multifamily and decide! In the Jake and Gino community, we have students that are partnering together. They’ve created relationships, they’ve gone to networking events, they’ve come to our events, and they are getting utilizing the mentorship program to dramatically shorten their learning curve.

It all takes a process and it’s all about the proprietary framework, the Buy Right, the Manage Right, and the Finance right? So if you think you’re ready for Multifamily, then learn how to implement the framework. You need to start taking control of your education. Once again, Education*Action= Results.

Let’s go out there and MIH!!

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15 Lessons learned from the Covid 19 Pandemic

When I look back at the outbreak of the corona virus pandemic, I see a few similarities to a hurricane that is preparing to slam against the coast of Florida. Why Florida? Because I am a relatively new arrival to Florida and Irma made an unexpected landing as I just moved down to the sunny state.

The uncertainty and fear of the pandemic mirror that of a hurricane, yet the pandemic has brought about a heightened level of fear what everyone is now calling a “new normal”. Once the hurricane has left, we are left to rebuild, similar to this pandemic that is hopefully getting ready to die off. Unfortunately, a hurricane affects only a certain geographical area, while the pandemic has wrought destruction and devastation throughout the U.S and the rest of the world.

Listen to the audio version of this article, narrated by Gino Barbaro:

In this article, Jake & I want to share with you unforgettable and important lessons that we have learned during the pandemic. We would like to share them with you so that you can prepare yourself for the next one.

I would like to list these lessons and then dive into several of them and give you our perspective. Here is the list:

Evaluate your partners and vendors.
Be grateful.
Real estate is local.
Don’t take things for granted.
Coach employees.
Have empathy and try not to judge others.
There is no such thing as over communication.
Turn problems into opportunities.
Use the time for personal development.
Have enough funds in your cap ex accounts.
Stick to our core values and mission statement.
Create core values if you don’t have them.
Strengthen customer service in your business.
Adopt and utilize new technology.
The numbers can lie.

Listen to the podcast:

Once the pandemic hit, we were setting our second quarter priorities for each of our entities. For us, the pandemic created even more work, due to the new rules and regulations that we had to implement. The extra communication with the team, the burdensome paperwork that came with filing for the Payroll Protection Plan, the new systems that were created during the stay at home lockdown, and on and on and on….

Not once did my partner Jake ever complain or bicker about the extra work created. He just put his head down, and proceeded to attack the work in Jake like fashion, running through a brick wall headfirst. Twelve and fourteen hour days have become the norm, and putting people first (one of our core values) has been the top priority. Needless to say, I have the right partner during good times and bad.

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A crisis is always a good time to assess your partnerships and vendors because most of us can perform relatively well during the good times. But when the crap hits the fan, a person’s true colors will only amplify. And Jake’s true colors of no excuse, MIH, run through a brick wall personality came through.

Be grateful

When things are going well, we expect them to continue and take them for granted. One thing that this pandemic brought into light was for me to focus on and be grateful for all the blessings that I have in my life. So how did I focus on the great things in my life? When I wake up in the morning, I write in my “gratitude” journal all of the things I am grateful for and anything positive that has occurred. I have noticed that if I focus on the positive as I start my day, it sets the tone for my day and raises my level of energy. Remember, whatever you focus on grows!!

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Turn problems into opportunities

Problems are a chance for us to experience pain, reflect upon that pain, assess the pain, and seek the opportunities that will reveal themselves to you. An example of a pain point throughout the pandemic was that property management in Tennessee was deemed an essential business, but how can you correspond with tenants if your offices are closed to the public? Our amazing team went to work, created the “Covid task force”, and began to revamp our systems. What solutions did we create? These are only a few examples.

Virtual leasing and virtual tours to fill the void with having contact with potential residents. This will not replace property managers as the pandemic subsides, but will enhance the customer experience.
Revise and complete our customer journey for our residents in the property management company and the investors in the syndication company.
Work on marketing for each entity and become better communicators to our residents, investors, employees and Jake & Gino community members.
Complete projects that were priorities, but were constantly being pushed to the next quarter.
Live and instill our core values throughout our organization.

The numbers can lie

As we have seen throughout the pandemic, the numbers are constantly changing. We once thought the pandemic could claim in excess of two million lives in the U.S., but the number has been revised downward to around 60,000. Although this number is still horrific and large, the response to the pandemic may have been radically different if the estimate of 60,000 would have been used to create a response.

Jake & I preach to our community members that they analyze and know the numbers in whatever market they select to invest in, along with creating their own criteria when “Buying Right”. Fall in love with the numbers, not the property, and stick to your parameters. What numbers am I referring to? What cap rate are you purchasing the property at, what is your cash on cash return, what is your debt coverage ratio, what are you projecting rent growth for the next three to five years, what are you underwriting expenses at, what is your IRR for the project?

Learn how to analyze a multi-million dollar deal in 10 minutes: Deal Analyzer Calculators

These are only a few metrics to focus on when executing the Buy Right framework. Don’t pencil whip the deal (make the numbers work), as our coach Bill Ham likes to say, just to make the deal work. I guarantee you that if you do, the deal will come around and whip you right back.

These are only a few of the lessons that we have learned from the pandemic. As a leader, it is our job to stay calm, not overreact, exude realistic optimism, continue to over communicate and receive input from your entire team. A pandemic is a huge and life changing event, but it can also usher in growth and opportunity if you can reflect upon it and maintain your composure throughout the ordeal.

I would love to hear what lessons you have learned during the Covid 19 crisis. Please leave us a comment down below.

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Pitch Anything By Oren Klaff

Being a father of six children, I am constantly being pitched to throughout the day, and I have to admit, I do a lot of pitching myself to get what I want from my kids. I always wondered why some pitches to my kids fell on deaf ears, and how some others worked like magic? The answer to that elusive question lies in the book Pitch Anything, by Oren Klaff. When I began to read the book, I knew instantly that it would sharpen my skills on how to raise capital and fund my real estate deals. But who would have thought I could work some Jedi mind tricks on the kids as well!!

Listen to the audio version of this book review:

Oren lays out his book in an easy to read fashion, filled with entertaining stories, and he lays out a simple to follow framework that will have any novice capital raiser ready to elevate their status and deliver a masterful pitch.

He begins the book where I would least expect it, in the formation of the brain. His big idea in the book is “There is a fundamental disconnect between the way we pitch anything and the way it is received by our audience.” It was a huge AHA for me, in that he illustrates in the book that there is a disconnect between the message and the receiver. Oren goes on to say that “We are hardwired to be bad at pitching. It is caused by the way our brains have evolved.”

Oren dives into the three parts of the brain:

Crocodile Brain: The primitive part of the brain that is responsible for the fight or flight response, and generates strong emotions. Unfortunately, the decision making in this part of the brain is also primitive.
Mid Brain: This part of the brain determines the meaning of things and social situations.
Neocortex: The problem solving part of the brain and where reason and logic are used to solve problems.

Oren goes on to describe how the brains work independently and together. We think that we are pitching our ideas from our neocortex to the other person’s neocortex, when in reality, we are pitching from our neocortex to their primitive brain. Let me give you a quick example of how powerful Oren’s teaching will revolutionize your pitch.

This is what I would normally do when I was pitching. I would start off by saying how wonderful multifamily is, how the investor would get an 8 pref, what the splits would be, how long we would hold the asset, and then dive into the Three Pillars of Real Estate. By now, I thought my thorough analysis was genius, and the investor would open up his checkbook and stroke the check. WRONG.

[Click the above image to check out the book at Amazon]

I was pitching my idea to the other person’s croc brain, the primitive brain, the one with the B.S. meter. Oren’s genius idea of creating novelty, interest, and brevity so that it attracts interest from the croc brain will allow you to get the message passed through to mid brain, and finally the neocortex. The goal is to create a message that is new or exciting, and not one that is perceived as a threat.

How have I refined my pitch to a potential investor? By trying to create emotion and intrigue, and by keeping the investor thinking about what I am going to say next. I can start off by saying:

So, investor X, what are the three basic human needs? And they would probably respond with “Food, clothing and shelter”. I would come back and say, “Close. It’s food, clothing and apartments!” I would also remind the investor about the abysmal stock market returns, the lack of control, and the fact that you can’t buy an apartment on the Internet (at least not yet), going back to the basic human need.

Oren then transitions into his framework of how to bridge the gap between the croc brain and the neocortex by introducing his formula: STRONG

S: Set the frame.
T: Tell the story.
R: Reveal the intrigue.
O: Offer the prize.
N: Nail the hook point.
G: Get the deal.

Oren continues his teaching with status, frame stacking, hot and cold cognitions, and the four phases of a pitch. I have just scratched the surface on the immense value that Oren delivers in this book, and if you don’t believe me, you need to listen to our podcast with the pitch master himself:

If you want to learn how to pitch a real estate deal, get your kids to bed early, get out of that parking ticket, or just want to learn how to be more persuasive, then you need to buy the book.

Pitch Anything

And once you’ve become a pitch master, buy his next book and learn how to Flip The Script.

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The 10 Biggest Mistakes I Committed When I Purchased My First Commercial Property

In November of 2016, after six months of back and forth negotiations, I purchased a 19,000 square foot mixed-use commercial building in New York. At the time, I thought it was an excellent investment and it would add a significant amount of passive income to my portfolio. Unfortunately, this passive income did not transpire.

Check out the audio version of this Blog, narrated by Gino Barbaro:

Two factors contributed to my failure with this investment:

Ego and Blind Spots.

To be effective, don’t let the need to be right more important than the need to find out what is true. I let my ego get in the way of assessing the investment. In this article, I want to focus on the ten “blind spots”, AKA, the ten mistakes.

Top Ten Mistakes:

Wrong part of the cycle
Ignorant of market and demographics
Not knowing the rents and property values
Unfamiliar with asset type
Bad negotiation
Fell in love with property
Overspent on repairs
No experience with commercial leases
Failed miserably with legal due diligence
Did not know true expenses

1.Wrong Part of the Market Cycle:

Who knew there were 4 market phases? My assumption, as that of most newbie investors, was that real estate was only appreciating, and if you bought real estate and held tight for the long term, you would be okay. Please read my article on the four phases of a real estate market.

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I purchased the asset during the hyper supply phase, and if I had purchased it correctly, things would not have been so painful. If I had waited around a year, I could have purchased the building at a significant discount for a multitude of reasons that we will discuss throughout the article.

In many markets across the U.S, we have reached this phase of the market. There is exuberance, money is flowing to real estate and cap rates have compressed to unattractive yields. It doesn’t mean that deals have vanished. Investors have to be more concerned with buying on actuals and underwriting their deals conservatively and with significant value-add opportunities.

2.Ignorant of the Market and the Demographics

This mistake could have easily been my biggest mistake, but if I had bought the asset in a buyer’s market, many of my sins would have been forgiven, or at least diminished. It is apparent in the past few years that many investors have made money in spite of their many mistakes. Every rising tide helps all ships, and cap rate compression helps those who overpaid.

Claim Your Free Copy of ‘Wheelbarrow Profits’ #1 Amazon Best-seller Signed by Gino Barbaro >> Click to Grab Now!

I lived only thirty minutes from the property, and I would classify it as investing in my backyard. Incredibly, I knew next to nothing about my backyard when it came to investing. This is a huge mistake for new investors. Just because you feel comfortable about the asset being in their market does not guarantee success.

I had no idea what metrics to look for, or how to use the metrics to rank the market. What was job growth, population growth, tenant laws, unemployment, etc., etc., etc… I learned the lesson the hard way, and when I decided to invest outside my market, I learned very quickly how to analyze a market. Jake & I created a market research document to help our students analyze and compare markets.

Download Your Copy Here:

3.Not Knowing the Rents and Property Values

Cap rate, cash on cash return, debt coverage ratio, huh?? I wish I could tell you what a cap rate was or how to calculate one before I bought the building, but I would just be lying to you. If anything good came out of this purchase (a couple of things did), I took my education seriously and learned how to underwrite a deal and focus in on value-add opportunities.

I had no idea what the market rate was for commercial leases, what buildings were selling for in the market or what the outlook was for the market. I failed miserably at valuing the asset, and it led me to vastly overpay for the property.

4.Unfamiliar With Asset Type

Running a multifamily is vastly different than operating a mobile home park. I had experience with rentals, but was completely unprepared for dealing with retail, industrial and office tenants. My lack of experience with commercial real estate affected all three legs of our framework; Buy Right, Manage Right & Finance Right.

I tell all beginning investors the first thing that needs to happen is that you need to focus on a niche and concentrate all of your efforts to mastering that niche. I am partial to multifamily, but real estate offers so many other niches, such as fix and flip, single family homes, mobile home parks, medical, industrial, just to name a few.

If you would like to learn more about multifamily investing and see if it is the right niche for you, click the image below:

5. Bad Negotiation

I was a terrible real estate negotiator, and thought that price was the only factor when negotiating a deal. I wish I had focused on the seller’s motivation to part ways with the property. Instead, I made it known how desperate I was to buy the property. It would have helped me tremendously if I had heard our podcast with former hostage negotiator Chris Voss. Click the image below to listen:

I can guarantee you that if I had followed Chris’s advice throughout the podcast, I would have easily saved at least $100,000. Please take the time to listen to the podcast, and learn how to utilize the DJ voice.

6.Fell In Love With Property

This was a huge mistake for me, and for most first time investors. Fall in love with the numbers, and everything else will fall into place. I was impressed with the looks of the property, the prestige, and imbuing emotion into the decision making process. This is not residential real estate, where the view matters. Net operating income rules in commercial real estate, and base all of your purchases on actual numbers, not on how the property makes you feel.

Full Disclosure: I still fall into the trap of falling in love with a property, but I am quickly snapped back to reality by thinking about this purchase and by two smarter partners! If you find yourself making excuses about bidding higher than your strike price, take some time out to reassess your underwriting, and refer back to this mistake.

Also read: 15 Ways To Increase Revenue In Your Multifamily Property

7. Overspent on Repairs

When I purchased my first multifamily property, a four unit in New York, I rehabbed the property as if I was going to move in it myself. We built what I now refer to as the Great Wall Of Mahopac, (the town where the property is located) replaced the entire roof, blacktopped the entire driveway, and performed countless other low generating value adds.

The problem was not the over fix. The problem was twofold: Number one, I drastically underestimated the cost of repairs, and secondly, I was repairing items that would not lead to additional revenue. Try renting an apartment that is constantly leaking, or retaining walls that are about to come crashing down on your tenants.

You think I would have learned my lesson. NOPE! I committed the same mistakes on the commercial deal as I did on this small multifamily. I now have been a part of building two great walls. They look great, but I probably should have tried to find a less expensive alternative.

This article will give you a framework on how to renovate your next apartment:

8. Overspent on Repairs

I had no idea what a commercial lease contained, let alone how to negotiate one. What did I do? What most other broke investors do! I went online and down loaded a free commercial lease. My father taught me you get what you pay for, and in this instance, he was dead right.

My next step was to contact an attorney and draft a proper lease for each tenant. It took me a while to get used to the language in the lease, the terms, the negotiation tactics and how to market to commercial tenants. It was a terrific learning lesson that I wished I had learned before investing in the asset.

9. Failed Miserably With Legal Due Diligence

Jake & I have created our Three Step Framework for due diligence:

Financial, Physical, and Legal.

Click th e Link Below to Read More About our Framework:

Three Step Due Diligence Framework

I could write an entire article on all the mistakes that I made during the legal due diligence. Let me highlight them for you so you can avoid these costly mistakes:

Office unit that was being utilized as an apartment (Illegal apartment)
No active commercial fire alarm system (not even smoke detectors!!)
Non-functioning water treatment system. Not in compliance with board of health
Several tenants did not have Certificates of Occupancy for their businesses
Tenant was illegally storing materials in space
Tenant was using space as an apartment (separate from the first mistake)
Tenant was late on rent payments

These are just some of the mistakes that were made when I bought the property. What angered me the most was that the town and the board of health were both aware of the gross negligence of the former owner. They allowed him to maintain the property in this condition. Once I took over, all of these issues came to the forefront. The town tightened up their inspection policies, and added additional ”fees” to the process. The lesson here: Buyer Beware! Once you buy it, it’s your problem

If I had any experience, I would have demanded that the seller rectify all of these issues, or I would have demanded a credit to fix all of the problems. Instead, I took over the property with all of these problems and I had to tackle them one at a time. I would recommend any investor to hire an experienced real estate attorney who can help you navigate the due diligence process.

10. Did Not Know True Expenses

This has become Jake’s pet peeve, and the downfall of countless newbie investors. I had no idea how much the operating expenses would be for this property, and was shocked at the amount of money it took to run the property. If there is nothing else you remember from this article, Remember this: Learn how much it will cost per unit to run your property, and stick to that number when you underwrite a deal.

Claim Your Free Copy of ‘Wheelbarrow Profits’ #1 Amazon Best-seller Signed by Gino Barbaro >> Click to Grab Now!

In our Knoxville TN market, it costs us around $4300-$4500 per unit in expenses to run a property. The vast majority of sellers will include on their pro forma half that amount in expenses, and an inexperienced buyer will underwrite the deal with a low expense number, thus inflating the NOI and end up overpaying. If you do not know what it costs to run a property in the market, call a couple of bankers or mortgage brokers and ask them what they are underwriting expenses when lending on a deal.

I hope that this article will steer you away from the avoidable mistakes that I made. The most important lesson that I learned from this deal was that “No deal is better than a bad deal.” If you have any questions or want to learn more about Jake & Gino, please contact me at

gino@jakeandgino.com or visit our website: Jake & Gino.

Click on the link to Work With Us and get ready for the next step in your journey in multifamily investing!

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Why Multifamily Kicks Single Family’s A$$

When I first started investing in real estate back in 2015, I went the single family house route. I saved up the down payment, submitted a crazy amount of documents to get a mortgage and voila, two months later, I closed on a 3 bedroom, 2 bathroom house. Everything was going well and then I bought my second single family house, same ordeal. It took me another year to save up the down payment, again submitted a crazy amount of documents for the mortgage and I was the owner of two single family homes.

However, the second single family home sat vacant for four months because I hired the wrong team member, my property manager. Having only two single family homes and one sitting empty left me with a 50% vacancy and me having to cover that entire mortgage myself for those four months.

It wasn’t until I hired the next property manager that I found out why my home sat vacant for all that time. Being an out of state landlord, I wasn’t able to go to the property easily. I relied on communication from the management team to provide insight & recommendations on the property. The new management team alerted me that there was another home across the street that was boarded up. Once someone purchased that home & took the boards down to rehab the property, I was able to easily find a tenant. It’s important to have open communication with your team and troubleshoot your issues in order to create and grow a successful business. If I had only hired the right team sooner, we could have brainstormed ideas about the home across the street and I could have avoided all that stress and pain.

Listen to the audio version of this article:

After that eye opening experience and tough lesson, I started to learn about multifamily and listened to Jake & Gino talk about things like:

Economies of scale
Tax benefits
The velocity of money

In 2018 I set out to buy my first multifamily property and purchased a duplex. Now having three properties and four units, if one was vacant, that’s only a 25% vacancy, which was still not a great percentage, but I was getting better at finding deals and underwriting. Now, having only a duplex, I still wasn’t able to cost effectively leverage things like cost segregation and see the power of the velocity of money.

Economies of Scale

Let’s fast forward to 2019 and now I’m really ready to buy my first large asset. I saved up the down payment and using one of my previously purchased single family homes and a 1031 exchange, I purchased an 8 unit property. With much less paperwork and a commercial loan from a community bank, I brought my portfolio to a total of 11 units. If I have one vacancy now, which is 9%, I still have 10 units paying me each month that can cover the mortgages and expenses.

In terms of expenses, with economies of scale, if I need to replace a roof on a single family home, that’s one unit to one roof. With a multifamily property, I can have multiple units under one roof. The expense is not such a shock, when you have multiple units contributing rent for that expense.

Tax Benefits

With the purchase of the 8 unit property, I was able to take advantage of a cost segregation study. A cost segregation study allows investors to realize significant tax advantages. Essentially, you are able to break the entire property down by the “useful life” of the various components of the property, allowing you to depreciate much of the property on an accelerated schedule. This study can cost thousands of dollars which makes it inefficient to perform on single family homes.

In that interview, Boomer also touches on the passage of the Tax Cuts and Jobs Act which allowed me to take advantage of 100%, first year bonus depreciation. If you’re a regular listener of the podcast, you’ve heard Jake mention that the tax benefits on their third property allowed him to become financially free and quit his W2 job as a pharmaceutical sales rep.

Velocity of Money

One major benefit of multifamily is watching my income grow much faster. For this example, let’s say you make $100 of profit each month per unit. With a single family home at the end of the year, I’d see an extra $1,200 (of course barring no major expenses). With 11 units, that’s $1,100 per month, which equals $13,200 per year. I’m allowing my investments to grow more quickly with a larger asset.

Single Family vs. Multifamily

There are certain advantages to owning a single family home. With a single family, I had much lower expenses and a higher cash on cash return. However, like stated above, when something broke down or I had to replace a large ticket item like a roof, that has the ability to wash out your cash flow. Also, when I had a vacancy it was a much harder hit compared to multifamily.

In terms of property management, my PM on my single family homes was making about $90-$100 a month (10% of the monthly rent) for managing my property. It’s hard to keep that team motivated when they collect such a small fee. Which is probably why that first PM team, was not motivated to find me a tenant. With multifamily, at a smaller percentage, but a higher gross monthly rent, that can be more motivation for the management team to provide better service to you and your residents.

In conclusion, I’m grateful for all that I learned by starting out with a single family home. However, seeing my cash flow reduced due to repairs and vacancies, left me wondering if this was for me. Having experienced that misery, I wanted to find a better route. Since investing in multifamily, I now know that this is the right vehicle for me and where I see my investments in the future.

– Jen is Operations Manager at Jake & Gino LLC

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